Sears: Is The End Finally In Sight For The World’s Slowest Liquidation Sale?

When I left Sears in 2003, I was quite pessimistic about the company’s long-term prospects. Some initiatives we had put in place during a two-year strategic re-positioning effort were gaining traction, but most key metrics were alarming. The apparel business was well below a sustainable productivity level. The appliance and home improvement segments–which accounted for roughly 50% of our enterprise value–were losing market share to better positioned competitors, mostly notably Home Depot and Lowes. And the one strategy that might have saved us was no longer a feasible option. My fear was that Sears’ slow death was inevitable.

The following year Eddie Lampert put two failing retailers together and promptly made a bad situation even worse. While Sears and Kmart both suffered from challenges driving revenue, Lampert focused on cutting costs. As leading brands realized that retail was moving to an era of greater customer experience and shopping integration, Lampert set up merchandise categories as warring factions. Next came the idea of starving the stores further to focus on making Sears more digitally savvy. Then he became enamored with an emphasis on making Sears “member-driven” by launching “Shop Your Way,” a frequency shopping scheme that only served to lower margins without restoring necessary sales growth.

After witnessing nearly a decade of flailing, in 2013 I publicly declared Sears “the world’s slowest liquidation sale” and suggested that they were a dead brand walking.

I have to admit that Sears has hung in there longer than I would have thought. The degree to which Lampert has been able to extract value from Sears assets has been surprising and remarkable. But he is rapidly running out of rabbits to pull out of his hat.

First, and most importantly, Sears has never laid out any realistic strategy to reverse a nearly perfect string of comp store declines for both the Sears and Kmart brands extending back to 2004. Sears cannot possibly cut enough costs to restore positive operating cash flow without growing top-line sales significantly.

Second, most store closings only make things worse. Contrary to popular belief, stores are needed to drive online sales, and vice versa. Sears’ fundamental problem is not too many stores, it is that is has become a brand that is no longer relevant enough for the assets and operating scale it has in place.

Third, with massive operating losses assured for the foreseeable future, Sears must raise a lot of cash to stay afloat. And it has already sold almost all the good stuff.

Yes, the presumably imminent sale of the Kenmore and DieHard brands may fetch in excess of a billion dollars. Yes, there is some real estate left to unload. Yes, the Home Services and Auto Centers retain some meaningful value. But don’t let the financial engineering strategies gloss over the fundamental point. There is no viable operating strategy to restore Sears to a profitable core of any material size. And unless the company can generate cash from operations before running out of assets to fund its staggering losses, it is not, in any practical sense, a going concern.

The company has been liquidating for many years now. It’s just that some of us are finally starting to notice.

 

This post originally appeared on Forbes where I recently became a contributor. You can check out more of my writing by going here.

Working on the wrong problem

When we see a brand struggling–or we find ourselves working within a flailing or failing organization–the first order of business should be clear. We need to understand the root causes. Once we’ve become keenly aware of what’s driving our problem–and accepted the reality of the situation–we are then ready to move into developing and launching a course of action.

So if the path is clear and obvious, why do so many retailers–and scores of other types of organizations, for that matter–get it so very wrong, so very often?

We regularly see retail brands hyper-focused on cost reductions when by far the bigger issue is lack of revenue growth (I’m looking at you Sears).

We see brands falling prey to the store closing delusion when often it turns out that closing stores en masse only makes matters worse.

We see brands blindly chasing the holy grail of all things omni-channel when, in most cases, they are merely spending millions of dollars to transfer sales from one pocket to the other–often at a lower margin.

We brands engaging in price wars they can never possibly win or without regard to the possibility that their customers aren’t even interested in the lowest price.

We see brands chasing average, the lowest common denominator, the one-size-fits-all solution because it seems safe. Yet it is precisely the most risky thing they could do.

Far too often we fail to pierce the veil of denial.

Far too often we fall victim to conventional wisdom, what we’ve always done or what we think Wall Street wants.

Far too often we ascribe wisdom to shrewd salespeople or charismatic and clever charlatans.

Far too often we fail to do the work, to ask for help, to dig deep to understand what’s really going on.

We can work really hard. We can focus our energies and those of our teams we great alacrity and intensity. We can pile on the data, build persuasive arguments and rock a really slick PowerPoint presentation. We can tell ourselves a story that convinces us we must be right.

But if we aren’t working on the right problem that’s all a colossal waste of time.

 

 

Holy stuckosity Batman!

“Stuckosity” isn’t a real word. It can’t even be found at Urban Dictionary. Well, at least not yet.

But certainly most of us are familiar with the quality of being stuck. Perhaps you’re feeling it right now.

We get stuck telling the same old stories about ourselves that are familiar, but serve no useful purpose.

We get stuck trying to solve problems with the same level of thinking that got us into trouble in the first place.

We get stuck defending the status quo, even when we know it’s not working.

We get stuck in self-righteousness, which almost never changes the other person’s mind or behavior, but frustrates us to no end.

We get stuck fighting reality, re-litigating the past, trying vainly to predict the future.

We get stuck striving for perfection, when perfect is both impossible and, ultimately, only a recipe for suffering.

We get stuck waiting for precisely the right time and to be fully ready, failing to see that those exact conditions will never ever come.

We get stuck in relationships because we fail to speak our truth and ask for what we want and need.

We get stuck unleashing our full potential because we wonder how other folks will judge us if we were to go out on a limb.

And on and on and on.

The key to getting unstuck is to first see it for what it is. And most of the time our stuckness is merely our habitual reaction to an irrational fear; to a fundamental misunderstanding of risk.

Once we become aware that staying in our fear–and being unwilling to let go of our story, our need for control and our desire to be right–is actually the most risky thing we can do, the door is cracked open to change.

Once we we accept that our behavior is simply habit, the debilitating result of a lifetime of bad conditioning, we can work to establish new, more healthy and useful ones.

Once we are committed to take action, we are finally free. Free to start before we are ready. Free to embrace failure as a natural outcome of growth. Free to be okay with our imperfection.

And that’s good thinking Robin.

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A monkey with a gun

Monkeys can be pretty entertaining. Some are awfully cute. It’s easy to get fascinated by their behavior which–especially with chimpanzees–is often quite similar to human’s. We can get seduced by some of their charming qualities.

At the same time, monkeys are inherently aggressive and can be prone to attack when put on the defensive. It’s also common for them to fling their feces all over the place for no apparent reason. And perhaps, like me, at some point you’ve been at the zoo with your young children and found yourself having to stumble through an explanation of why “that monkey is touching himself.” Let’s just say when it comes to sexual matters, monkeys can be rather impulsive.

Once we accept that a monkey is a monkey just doing monkey things, why would we be the least bit shocked when they act like a monkey? In fact, time spent hoping or expecting them to start behaving like a human, a zebra, a bird, or anything other than a monkey, is simply time wasted. Our best intentions, our righteous indignation, our efforts to change them only results in our being frustrated and, perhaps, a pissed off ape.

If we really understand how monkeys are we know what is safe to let them do and what would be reckless and dangerous. So it would seem rather obvious you’d never give one a gun because something like this could very well happen.

If you have the misfortune to find yourself confronted with an AK 47 wielding chimp you have a few choices. You can run like hell. You can try to stop him. Or you can just hope it all works out.

Of course, the very best thing we can do is never let a monkey get anywhere close to a gun in the first place. Another good thing to do is to never lose sight of a good metaphor.

 

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Without official rank or title

Perhaps we’ve forgotten that Martin Luther King Jr. was never elected to run the civil rights movement or appointed to the job. He didn’t have “take on the entire nation’s long history of racial injustice” in his position description as a Baptist minister. And I’m fairly certain he didn’t suddenly decide to go change the world because he was ordered to do so by his boss, a Board of Directors or some steering committee. In fact, while he was encouraged by many, he was also vilified and challenged by many more.

We can only wonder what might have happened had King decided to wait around to be officially anointed or had hesitated to act boldly in the hope that others might step up first to take the heat and scorn.

Decades after King’s work the “is-ness of today” still stands in stark contrast to “the ought-ness of tomorrow.”

And every day we remain confronted by opportunities to challenge a status quo that isn’t working across many aspects of our lives and those of our brothers and sisters.

Sometimes that challenge shows up as a minor slight, other times it’s a devastating hurt. Sometimes it’s a system that simply doesn’t serve clients all that well, other times it’s one that perpetuates systemic injustice.

Every day we get to choose whether we will assume it’s always someone else’s job to act or whether we will be an uncrowned leader. Every day we decide whether it matters whether it’s in our official job description to step up or whether it is our personal responsibility as a part of our shared humanity.

If we plan on waiting to make a difference in the world until we get promoted or it’s in our job title we are likely to be waiting a long, long time.

As President Barack Obama reminds us “the arc of the moral universe may bend towards justice, but it doesn’t bend on its own.”

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Gone fishin’

After 6 years and more than 500 posts I’m taking a break.

It’s time for me to recharge the batteries, repot the plant, hit the reset button or whatever cliche floats your boat.

For the next several months I’m putting the kibosh on taking on new consulting gigs and generally saying “no” to anything that can be deemed “corporate.”

I’ve begun looking at everything I do–and own–and asking whether it truly gives me joy. It’s leading to a lot of decluttering. I feel lighter already.

I’ve also begun tapping into the power of ‘no’ and the power of ‘now.’ I feel more than a wee bit liberated.

On the other hand, I will be saying ‘yes’ to more travel, to expanding my knowledge of the crazy world we live in, to cultivating maitri and to advancing my work in the social impact space.

It’s fun and energizing. It’s also a little bit scary. Of course that is the nature of anything really worth doing.

So fair warning: if you feel like I’m ignoring you it’s pretty likely to be true. But it’s not personal. Trust me, it will be fine.

Some people that I’ve told of my plans have looked at me like a confused german shepherd. To them I say, well, maybe I’m crazy. But after all, it’s not about you.

Others have said “I’m so jealous, I wish I could do that.” To them I say, well, what’s stopping you?

Anyway, thanks for giving me the gift of your attention. It means a lot.

See you in another life brothers and sisters.

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It’s easy to vote ‘no’

“Fear is a natural reaction to moving closer to the truth.” ~Pema Chodron

It’s rarely the case that organizations utterly lack new ideas or things to try. They just get voted down most of the time.

Many of us when confronted with change are quick to find fault with moving ahead. It might not work. We could look foolish. It just makes me uncomfortable. Maybe I’ll get fired. Best to just say ‘no.’

Most of us are filled with “should’s.” I should finish that novel or start that business. I should speak up more. I should finally make that trip. I should deal with the unfinished business with my family. And on and on. But our fear keeps us stuck and ‘no’ is all too often the seemingly safe choice.

Voting ‘yes’ more often isn’t the path of least resistance and it is far from a guarantee of success. Not everyone will get it, few may have your back and others might shun you entirely.

Stay the course. Be vulnerable. Chase remarkable.

Going out on a limb is where we’re needed, where we’re called to be, where the magic happens.

And your vote counts.

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